Europe warns Greece: talk or face catastrophe

Last hope rests on emergency summit as Eurozone ministers’ talks end without deal

GREECE was last night urged to get back to the negotiating table to avoid a “catastrophic” fate after talks between Eurozone finance ministers ended without the prospect of a deal.

Attention shifts now to an emergency summit of European leaders set for Monday to break the deadlock and avoid a potentially damaging default, which could lead to a possible exit by Greece from the Eurozone.

European Economics Commissioner Pierre Moscovici branded the situation extremely difficult and worrying, and warned that the endgame nears.

“I would like to make an appeal to the Greek government to get back seriously to the negotiating table, to commit themselves in a constructive way and to accept that reasonable compromises have to be made to avoid a fate which would be catastrophic,” he said.

International Monetary Fund chief Christine Lagarde warned that Greece will be in default if it misses a payment deadline at the end of the month – dismissing hopes of a grace period for the cash-strapped country.

The IMF boss said Greece would be considered to be in immediate default if it missed a payment of close to €1.6bn by June 30.

Athens has already conceded that it doesn’t have the money to make the payment.

“It will be in default – it will be in arrears vis-a-vis the IMF, yes, on July 1,” Ms Lagarde said in Luxembourg. And in a stinging remark, she appeared to take a swipe at the Greek government.

“We can only arrive at a resolution if there is a dialogue, and for the moment, we are short of the dialogue,” Ms Lagarde said.

“The key emergency in my view is to restore the dialogue with adults in the room.”

Ministers gathered amid little hope of a breakthrough in the talks between Athens and its creditors to unlock much needed bailout cash as debt payments loom. The country’s extended bailout programme expires in two weeks, on the same date that the IMF payment falls due.

The European Commission, European Central Bank and the IMF want Greece to agree to a number of reforms, including contentious pension cuts, before releasing a €7.2bn tranche of bailout cash. But Greek Prime Minister Alexis Tsipras has warned that “blind insistence” on pension cuts would worsen the economic crisis in the country.

And Greek Finance Minister Yanis Varoufakis said last night that Greece and its creditors were close to a deal on fiscal targets with a gap of just 0.5pc.

He said pension cuts for low-income pensioners would cause popular discontent and said Greek negotiators had put forward a privatisation agenda.

He also said Athens had put forward an “automated deficit brake” at yesterday’s meeting, which would kick in if there were signs that the Greek budget was heading into deficit.

German Chancellor Angela Merkel said there was still chance of a deal if the will can be found, and French Finance Minister Michel Sapin also struck an upbeat tone, saying the “differences can be overcome”. But Eurogroup chair and Dutch Finance Minister Jeroen Dijsselbloem saw little prospect of a deal yesterday.

“Regrettable to say that too little progress has been made in the talks between the institutions and Greece and that no agreement as yet is in sight,’’ he said after the meeting.

Adding to the pressure on Athens, bank withdrawals accelerated and government revenue slumped. Savers pulled out €2bn between Monday and Wednesday.

‘The key emergency is to restore the dialogue with adults’